EU Blocks London-German Stock Exchange Merger

BRUSSELS (AFP) – The EU blocked the blockbuster merger of the London Stock Exchange with Germany’s Deutsche Boerse on Wednesday, snagged by competition concerns and the fallout from Brexit.

“As the parties failed to offer the remedies required to address our competition concerns, the Commission has decided to prohibit the merger,” said EU Competition Commissioner Margrethe Vestager in a statement.

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The decision was widely expected after the LSE last month said it had refused the European Commission’s request to divest its majority stake in Italian trading platform MTS.

The commission said the sale of MTS would have prevented a monopoly in the trading of bonds and provided a “clear cut remedy to meet these concerns.”

The blockbuster merger was unveiled to much fanfare last year and vigorously backed by both sides even in face of Brexit.

But concerns grew in Germany after it was revealed that the merged company would be headquartered in a soon to be non-EU London and not Frankfurt.

The proposed tie-up also drew criticism from France, Belgium, Portugal and the Netherlands, fearful for the future of their own stock exchanges, owned by Euronext.

It is the third time that the Frankfurt and London stock exchanges have tried to tie the knot, following two unsuccessful attempts in 2000 and 2005.

The development could now reignite interest from US-based global markets operator Intercontinental Exchange — owner of the New York Stock Exchange — which had decided against bidding for the LSE last May.

Deutsche Boerse, which also operates the Luxembourg-based clearing house Clearstream and the derivatives platform Eurex, this month said it still had global ambitions despite the failure.